What is Bitcoin?
If you’re here, you’ve heard of Bitcoin. It was one of the most frequent headlines in the news in the last year – as a get-rich-quick scheme, the end of finance, the birth of a truly international currency, the end of the world, or a technology that improved the world. But what is Bitcoin?
In short, it could be said that Bitcoin is the first decentralized money system used for online transactions, but it will probably be useful to dig a little deeper.
We all know, in general, what ‘money’ is and what it is for. The most significant problem that arose in the use of money before Bitcoin relates to its centralization and control by one entity – the centralized banking system. Bitcoin is 2008/2009. invented by an unknown creator under the pseudonym ‘Satoshi Nakamoto’ to introduce decentralization of money on a global scale. The idea is that currency could be traded across international lines without hassle or fees, checks and balances would be distributed worldwide (not just on the books of private corporations or governments), and money would become more democratic and equally accessible to all.
How did Bitcoin start?
The concept of Bitcoin, and cryptocurrencies in general, was started in 2009 by Satoshi, an unknown researcher. The reason for his invention was to solve the problem of centralization in the use of money that relied on banks and computers, which many computer scientists were not satisfied with. Achieving decentralization has been attempted since the late 90s without success, so in 2008 Satoshi published a paper offering a solution, which was overwhelmingly welcomed. Today, Bitcoin has become a well-known currency for internet users and has spawned thousands of ‘altcoins’ (non-Bitcoin cryptocurrencies).
How is Bitcoin made?
Bitcoin is produced through a process called mining. Just as paper money is created by printing and gold is extracted from the ground, Bitcoin is created by ‘mining’. Mining involves solving complex mathematical problems related to blocks using a computer and adding them to a public ledger. When it started, a simple CPU (like the one in your home computer) was all that was needed to mine, however, the level of difficulty has increased significantly and now you will need specialized hardware, including a high-end graphics processing unit (GPU), to mine Bitcoin .
How should I invest?
First, you need to open an account on the trading platform and create a wallet; you can find some examples by doing a google search for “bitcoin trading platform” – they generally have names that include “coin” or “market”. After joining one of these platforms, click on funds and then click on crypto to select your desired currencies. There are many indicators on each platform that are very important and you should definitely look at them before investing.
Simply buy and hold
Although mining is the safest and, in some ways, the easiest way to earn Bitcoin, there is too much fuss involved, and the cost of electricity and specialized computer hardware makes it out of reach for most of us. To avoid all of this, make it easy, enter the amount you want from your bank directly and click “buy”, then sit back and watch your investment grow in line with the price change. This is called an exchange and takes place on many exchange platforms available today, with the ability to trade between many different fiat currencies (USD, AUD, GBP, etc.) and different crypto coins (Bitcoin, Ethereum, Litecoin, etc.).
If you are familiar with stocks, bonds or Forex exchanges, you will easily understand crypto trading. There are Bitcoin brokers like e-social trading, FXTM markets.com and many others to choose from. Platforms provide you with Bitcoin-fiat or fiat-Bitcoin currency pairs, for example BTC-USD means trading Bitcoins for US dollars. Track price changes to find the perfect match according to price changes; platforms provide price among other indicators to give you proper trading advice.
Bitcoin as a stock
There are also organizations set up to allow you to buy shares in companies that invest in Bitcoins – these companies trade back and forth and you just invest in them and wait for your monthly benefits. These companies simply pool the digital money of different investors and invest on their behalf.
Why should you invest in Bitcoin?
As you can see, investing in Bitcoin requires some basic knowledge of the currency, as explained above. As with all investments, it involves risk! The question of investing or not is entirely up to the individual. However, if I had to give advice, I would advise in favor of investing in Bitcoin on the grounds that Bitcoin continues to grow – although there has been one significant boom and bust period, it is very likely that cryptocurrencies as a whole will continue to increase in value over the next 10 years. Bitcoin is the largest and most well-known of all current cryptocurrencies, so it’s a good place to start and the safest bet right now. Although it is volatile in the short term, I suspect you will find that Bitcoin trading is more profitable than most other ventures.